Integrating the inter- and intra-annual dynamic features of capital into environmental footprint assessment: Revisiting China's greenhouse gas footprints, 1995-2015

Abstract

Assessments of the displacement of pollution emissions or other resources through trade attribute local production to remote consumers, yielding environmental footprints for the respective regions. Recently, the previously neglected temporal dimension of capital goods-built up in the past and continuously serving production activities in the future-has received increasing attention in environmental footprint assessments. Based on an inter-annual dynamic capital-endogenised multi-regional input-output model, this study further integrates the intra-annual dynamic features of capital production and consumption. We quantify the greenhouse gas (GHG) emissions embodied in China's capital consumption over the past two decades and assign this part of GHG emissions into finished goods and services over time. Our results show that China's GHG footprint in 2015 would be 7 Gt if capital-related GHG emissions were considered. This figure is 28% higher than the GHG footprints of China's final consumption estimated by conventional consumption-based accounting (CBA) and 41% lower than that of China's final demand estimated by conventional CBA. Overall, around 8% of GHG footprints would be overestimated if we do not consider the intra-annual dynamic feature of capital in the assessment. The inter-annual allocation shows that the capital-related GHGs of China's final consumption emitted on average in the last six years, which is still increasing owing to the long lifespans of capital assets. In light of the synergies among capital development, environmental sustainability, and human needs satisfaction, it is vital to uphold economic and environmental efficiency in capital development decision-making.

Keywords: Capital development; China; Global supply chain; Greenhouse gas emissions; Inter- and intra-annual allocation.